Canadian VC Activity Rises to $1.8 Billion in Q3, Driven by AI Megadeals

Investment in Canada’s venture-capital (VC) market saw a notable increase in the third quarter of 2025, driven by a series of significant transactions. According to the latest report from the Canadian Venture Capital and Private Equity Association (CVCA), investment levels reached $1.8 billion across 123 deals, up from $1.6 billion in the previous quarter and $1.4 billion in the first quarter of the year.

The CVCA pointed out that this quarter ranks among the highest for capital deployment in the past five years. Despite the rise in investment, deal volume has continued to decline, reflecting a strategic shift towards fewer but larger and more deliberate investments.

Megadeals Propel Investment Growth

Megadeals, defined as transactions valued at $50 million or more, accounted for a staggering 75 percent of all capital deployed in the third quarter. They also represented 60 percent of the total VC investment so far this year, despite constituting only five percent of total deal volume.

The standout in this quarter was Cohere Inc., an artificial intelligence startup based in Toronto, which secured $689 million from major investors including Nvidia Corp., AMD Ventures LLC, and local venture firms like Inovia Capital Inc. and the Healthcare of Ontario Pension Plan. Additionally, Cohere raised an extra $100 million later in the quarter.

Other significant investments included Toronto-based Moonvalley AI, which raised $121 million in July for its AI video generator, and Blue J Legal Inc., which secured $167 million in August for its tax software. Also noteworthy was UniExpress Inc., known as UniUni, which raised $95 million in its Series D round in June.

Sector Performance and Trends

The internet, communications, and technology (ICT) sector rebounded in the third quarter, with investment nearly doubling to $1.2 billion across 54 deals. However, overall investment in ICT remains significantly lower compared to previous years, with $2.7 billion invested year-to-date compared to $4.9 billion in 2024 and $4 billion in 2023.

The life sciences sector also showed resilience, recording $1 billion in investment over 82 deals this year, although this is down from the $1.5 billion invested in 2024 across 142 deals. The CVCA highlighted life sciences and agribusiness as areas of strength, with investment levels approaching or surpassing year-end totals from the previous year.

Seed- and growth-stage investments have proven to be the most resilient segments. Year-to-date, seed-stage investments totaled $579 million, representing only a 12 percent decline from full-year 2024 levels, despite fewer deals. Growth-stage deal volume surged by 71 percent year-over-year in the third quarter, further underscoring investors’ growing interest in later-stage opportunities.

Venture debt, which provides loans to early-stage and high-growth startups, cooled down in the third quarter, despite reaching some of the highest levels on record for 2025. So far this year, $717 million has been secured across 50 transactions, but the number of deals fell by 35 percent quarter-over-quarter, and total amounts invested dropped by 66 percent.

Exits via secondary transactions, where investors sell their stakes to other investors, rose to $919 million across six deals in the third quarter, marking a 20 percent increase from the $789 million recorded for all of 2024. Secondary transactions now account for 74 percent of all disclosed exit proceeds in 2025, highlighting their importance as a liquidity pathway for investors.

Mergers and acquisitions represented 80 percent of all exits this year, with $326 million sourced from 24 deals, down from $4.3 billion across 35 deals in 2024. Initial public offering (IPO) activity remains absent in 2025, mirroring trends from the previous three years.

As Canada’s VC landscape continues to evolve, the focus on megadeals and strategic investments reflects a growing industry that is adapting to changing market dynamics.